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Does Trudeau have a strategy for the upcoming NAFTA talks?

July 4, 2017 - 5:00pm

While a recent Nanos Research survey found that 54 per cent of Canadians are either open or somewhat open to the Trudeau government making concessions to the Trump administration to preserve the North American Free Trade Agreement (NAFTA), a new report by the Canadian Centre for Policy Alternatives (CCPA) suggests that may not be necessary.

The report says that if Trump actually terminated NAFTA the impact on the Canadian economy - contrary to conventional wisdom - would be relatively minimal. The report notes that if NAFTA were abrogated then Canadian exporters would fall back on World Trade Organization (WTO) rules and tariff rates.

It highlights, "The general impacts are surprisingly modest, although some sectors facing tariff peaks would be hit harder. Based on 2016 trade figures, reverting from NAFTA to WTO bound tariff rates would have resulted in, at most, $US4.2 billion in extra tariff costs (1.5% of the value of Canadian exports to the U.S. in 2016). The report demonstrates that Canada has a stronger negotiating position in coming NAFTA talks than is often assumed and can afford to walk away from an 'America First' deal if U.S. demands are too costly or unreasonable."

Toronto Star columnist Thomas Walkom points out, "Without NAFTA, 41 per cent of Canadian exports to the U.S. would still face no tariffs at all. The remaining 59 per cent would face, on average, extremely modest tariffs. The authors calculate that the value of these extra tariffs would total roughly $4 billion a year — a relatively small amount when compared to annual exports of roughly $279 billion."

When considering that $4 billion figure, it may be helpful to remember that the Trudeau government has committed to spending an additional $62.3 billion over the next 20 years on the military to placate Trump and strengthen Canada's negotiating position in the upcoming NAFTA talks. It may also be useful to remember that investors have launched more than 38 NAFTA Chapter 11 investor-state dispute settlement (ISDS) challenges against Canada totalling more than $6 billion.

On June 30, federal NDP leader Thomas Mulcair and trade critic Tracey Ramsey wrote Trudeau demanding that "the government inform Canadians about its priorities" in the talks that are expected to begin in mid-August.

Mulcair and Ramsey highlight, "With less than two months remaining in the required 90-day notice to Congress, you have yet to announce a credible strategy to stand up to the US government, protect Canadian jobs, and protect market access for our many deeply integrated sectors. Your government’s attempts to appease the Trump administration are clearly not working, as evidenced by the recent imposition of catastrophic tariffs against our softwood lumber producers, and inflammatory rhetoric against our supply management and energy sectors."

They ask Trudeau:
1- Will you commit to not granting any more concessions that will undermine our supply management system, and how will you protect the system?
2- Will you remove ISDS provisions from NAFTA?
3- Will the government pull out of these regressive [energy proportionality] provisions?
4- How will your government protect and promote manufacturing jobs during negotiations, and defend market access for manufacturers?
5- Will the government make significant improvements to enhance the enforceability of labour and environmental standards?
6- What is your plan with respect to intellectual property under NAFTA [given Canada already has high drug prices]?